[04:29:41 PM] => Myiris : Welcome to the live chat session.
[04:30:25 PM] => Myiris : Our guest, Mr. K. Ramanathan, Fund Manager, Birla Sunlife Mutual Fund, will be joining us shortly.
[04:30:43 PM] => DISCLAIMER
[04:31:21 PM] => Mr. K. Ramanathan is the Fund Manager, Birla Sunlife Mutual Fund. At the time of this conversation / chat, Mr. Ramanathan may or may not have positions in the stocks mentioned below, although holdings may change at any time. The views expressed by Mr. Ramanathan is based upon information that he considers reliable, but does not represent that it is accurate or complete, and it should not be relied upon as such. Mr. Ramanathan, his company and its affiliates, officers, directors, partners, and employees may, from time to time, have long or short positions in, buy or sell and deal as principal in the securities, or derivatives thereof, of companies mentioned herein and may take positions inconsistent with the views expressed.
[04:32:02 PM] => None of the information contained herein constitutes, or is intended to constitute a recommendation of any particular security or trading strategy or a determination that any security or trading strategy is suitable for any specific person. To the extent any of the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. You should consult with and rely upon your own advisors whether and how to use such information in making any investment decision.
[04:32:21 PM] => Lastly the views expressed by Mr. Ramanathan have no bearing whatsoever with that of IRIS Ltd. IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website www.myiris.com.
[04:32:43 PM] => Welcome to the chat session Mr. Ramanathan.
[04:33:38 PM] => Nirav Desai : Should I go for income funds for a horizon of 2-3 yrs or should I go for gilt funds?
[04:35:22 PM] => KR : A very good question. In a declining interest rate scenario typically gilt funds give higher returns than Income funds due to two reasons :
[04:36:10 PM] => (I) higher average maturity /duration of the portfolio,
[04:36:24 PM] => and (ii) flexibility in duration management due to high liquidity of G-Secs.
[04:37:24 PM] => For e.g.: the Long-term plan of Birla Gilt Plus has an average maturity of about 10 years as compared to about 4.5 years of Birla Income Plus and hence BGP (LT plan) has given a return of 28% in the past 12 months (in a declining interest rate scenario) as against 16.85% return given by BIP in the past 1 year (please don’t assume these as the expected returns going forward!!!!). However the price risk is higher in BGP (LT plan) as compared to BIP due to its higher avg. maturity.
[04:40:09 PM] => Over a 2-3 year period it is very difficult to comment on which fund is better as it entirely depends on the volatility in interest rates and the duration calls that a fund manager takes. But ideally if interest rates remain flat an income fund should give you better returns for 2-3 year investment horizon than a gilt fund.
[04:41:43 PM] => dsplall : What do you feel? Is the market bottomed out?
[04:43:00 PM] => KR : I presume you are asking about interest rates. We expect the interest rates to remain rangebound in the short term. We do not expect a further dramatic fall in interest rates, at least in the short term.
[04:44:03 PM] => Ashar Mihir : Is it a good time to enter a tech fund, at a correction which is bound to come?
[04:44:30 PM] => KR : Please restrict questions to MIPs and debt funds.
[04:45:28 PM] => Priya : Sebi`s plan to link the capital base of AMCs to the quantum of funds managed by them. Considering that this will increase investor confidence, ensure liquidity, and help meet contingencies, why then has the MF industry opposed the proposal?
[04:46:29 PM] => KR : I would not like to comment on this now.
[04:47:19 PM] => Herlex : Can I sell the Sun Pharma & Ranbaxy at current levels?
[04:47:52 PM] => KR : No questions on specific stocks please.
[04:49:08 PM] => Herlex : Do I buy or sell Pentamedia, which I had at Rs. 360?
[04:49:52 PM] => KR : No questions on specific stocks please.
[04:53:18 PM] => Arun R : What are the advantages of MIPs in today`s market? Isn`t this the right time to invest in equities?
[04:55:52 PM] => KR : Considering the low interest rate scenario the returns in debt funds going forward for a 1-year horizon would be only around 8%. Considering this and considering the fact that the valuations in the equity markets looks attractive MIPs are very good investment opportunities today. MIPs have a flexibility of going upto 15% in equity.
[04:56:13 PM] => In the first 8 months of this calendar year the equity exposure in Birla MIP was kept very low at around 1.5-2% due to the uncertain equity markets. We have now increased the equity component to around 3% and plan to increase it further. The equity component should help Birla MIP generate superior returns over the medium term compared to pure debt funds.
[04:58:04 PM] => Preetsan : Sir, I have 350 Infosys bought from IPO in1992 what should I do now?
[04:58:49 PM] => KR : No questions on specific stocks please.
[05:02:14 PM] => Guest: What do you think for the market in a one-month horizon?
[05:02:28 PM] => KR : Please restrict questions to MIPs and debt funds.
[05:04:47 PM] => kanchisridhar : I am holding 1500 shares of Nath Seeds in the view of growing bio tech revolution. In recent days I heard a news that Nath Seeds is going to demerge into three separate units. Of these Nath Seeds is holding only investments in their companies and business of plantation? Is it worth as a biotech share or the entire news which I heard is false? Please answer, Sir.
[05:06:28 PM] => KR : No questions on specific stocks please.
[05:06:48 PM] => Cavenky : What is the upward movement for Satyam Computers?
[05:07:13 PM] => KR : No, questions on specific stocks please.
[05:08:04 PM] => Mallika : Sir, Can you tell me more about your bond fund?
[05:09:52 PM] => KR : Birla Income Plus (our income fund) manages about 2125 cr. in assets and is one of the largest debt fund in the country. This fund has an average maturity of about 4.5 years and has about 84% invested in AAA securities and the remaining in AA securities.
[05:12:29 PM] => The fund has generated superior returns compared to competition since inception. If you want further information and advice you can contact your financial advisor or our customer service people at 6928000 (Bombay).
[05:13:21 PM] => AshokM : What do you think about the interest rates? Are they likely to come down further?
[05:13:53 PM] => KR : We expect the interest rates to remain rangebound going forward. While the macroeconomics factors are conducive to interest rates remaining soft in the short term the probability of a further dramatic fall in interest rates is low.
[05:14:56 PM] => Ramaprasad : Sir, has the softening interest rates attracted more investors to MIPs?
[05:16:01 PM] => KR : Yes, with interest rates coming down sharply the returns from bond funds going forward will be in the range of only 7.5-8%. Considering this and the fact that equity valuations are attractive equity presents an attractive investment opportunity.
[05:17:04 PM] => We can invest upto 15% in equity in Birla MIP. We had kept the equity exposure at around 1.5-2% upto October end due to uncertain markets. But we have begun increasing out equity exposure. Due to this Birla MIP should give about 100 bps above a bond fund in the medium term. This should attract more investors to Birla MIP.
[05:19:24 PM] => Milind Ganne : Please advise on GILT price movement over the next quarter?
[05:20:57 PM] => KR : We expect interest rates to remain rangebound in the short term and hence one should expect returns of about 7.5-8% returns from gilt funds going forward.
[05:22:19 PM] => Veer Raghav : Could you please tell me about the performance of Birla MIP?
[05:23:50 PM] => KR : Birla MIP has performed well and has generated superior returns compared to competition. We have a consistent dividend paying track record since inception. This has been due to our prudent fund management and controlled exposure to equities. We also have a buffer of 2-3 months dividend payment, which can come in handy in case of significant volatility in the bond and equity markets.
[05:24:39 PM] => Ganesh : Given the current interest rate scenario isn`t it better to invest in PPF than in a Gilt, or Income Fund?
[05:25:02 PM] => KR : Liquidity is a very important feature which mutual funds offer that is not there with PPF investments.
[05:25:35 PM] => Sanjay : Is there any target returns that you have set for Birla MIP?
[05:27:38 PM] => KR : Birla MIP should give about 100 bps over bond funds in the medium term. We expect returns of about 9% going forward.
[05:27:58 PM] => RK 76 : What is the average duration in your debt portfolio?
[05:28:44 PM] => KR : Average maturity of debt portfolio in MIP is around 3.5 years.
[05:30:21 PM] => K-Dinesh : Is there any perceptible shift from equities to debt after 9-11?
[05:31:05 PM] => KR : There were some redemption immediately after the Sep-11 attack. But inflows have started coming into debt funds now.
[05:31:49 PM] => Raju : What`s your outlook on Government yields? Are they stabilizing?
[05:32:44 PM] => KR : We expect the interest rates to remain rangebound going forward. While the macroeconomics factors are conducive to interest rates remaining soft in the short term the probability of a further dramatic fall in interest rates is low.
[05:33:20 PM] => Balram : Has the high inflows into debt funds receded?
[05:34:07 PM] => KR : We are seeing good inflows into debt fund today but surely not as much as we saw in the first half of this calendar year.
[05:37:04 PM] => Rajiv : How would you compare the performance of your debt funds vis-à-vis your competition?
[05:37:48 PM] => KR : Our debt funds have been performing well. The recent CRISIL ranking of income funds has ranked Birla Income Plus CPR 2 (out of 5 ranks, CPR 1 being the highest). Our gilt schemes and cash fund have been in the top quartile in terms of returns and Birla MIP continues to maintain its consistent dividend paying track record.
[05:39:20 PM] => HG65 : Are there any parameters by which one can judge funds besides their returns or portfolios?
[05:40:41 PM] => KR : Risk adjusted return is a better method than comparing pure returns while judging the performance of individual funds. There are independent fund ranking agencies like CRISIL and Value research have developed in-depth methodologies for comparing and ranking funds.
[05:42:46 PM] => Rekha A: How do you see the future of liquid funds in the long-run?
[05:43:50 PM] => KR : Liquid funds cater to an investor who wants to park in money for the short term - typically say upto 1-2 months. Say for eg instead of money lying in the savings bank yielding only about 3.5% it is better parked in Birla Cash plus which should give around 6.5-7% return. Also there are other benefits like liquidity, tax benefits and transparency. Hence Liquid funds have good potential in the long run.
[05:45:16 PM] => Bina Murali : Are you happy with the performance of Birla MIP? Whats been the return like?
[05:46:29 PM] => KR : Birla MIP has given superior returns compared to competition since inception. Birla MIP has given an annualized return of about 12.3% in the past 9 months. It has also maintained its consistent dividend paying track record.
[05:47:54 PM] => Myiris : That's the end of the chat session for today.
[05:50:06 PM] => Myiris : We thank you all for your participation.